The CEO of a manufacturing company expresses frustration his plant employees have to key entries into the shop floor system. Why not a voice interface? And anticipating the objection, says don’t tell me they cannot use noise canceling technology to offset the sounds of machines?

Not an unreasonable request at all. And one of many requests enterprise vendors have been ignoring.

For years now, Gartner and other analysts have been telling customers they have accumulated technical debt to vendors by not upgrading to the latest releases of software. But we have forgotten what Ward Cunningham said in 1992. He is credited with having coined the term

"Shipping first time code is like going into debt. A little debt speeds development so long as it is paid back promptly with a rewrite... The danger occurs when the debt is not repaid.”

Vendors have been accumulating gobs of technical debt by not keeping the software up with the times, even though customers keep paying them maintenance or annual subscriptions. You see it manifested in many ways

Continued customer use of spreadsheets, often large ones, when analytical tools were supposed to have replaced them

Vertical apps which continue to only be supported in on-prem mode when vendors have been pushing cloud and in-memory versions of horizontal apps for years

Significant customer customizations because the functionality delivered was inadequate

Large number of “ring-fence” tools and applications because the core functionality delivered by the vendor was inadequate or has not kept up over the years

UX lagging that which consumer tech has been delivering for a while

Vendor investment in platforms and tools, when customers would prefer the money going into application functionality

Part of the issue is vendors follow a formula to keep investors happy and only spend 10 to 12% of revenues on R&D. And worse, much of that goes towards investment for new markets the vendor wants to chase.

There is an old expression “Dance with the one who brung you.” Pay off your technical debt to your incumbent customers. Or risk losing them to third party maintenance or having them ring-fence you to insignificance.

We have had many previous hype cycles around AI. As I wrote in Silicon Collar : “Since the 1950s! That is when Alan Turing defined his famous test to measure a machine's ability to exhibit intelligent behavior equivalent to that of a human. In 1959, we got excited when Allen Newell and his colleagues coded the General Problem Solver. In 1968, Stanley Kubrick sent our minds into overdrive with HAL in his movie, 2001: A Space Odyssey. We applauded when IBM’s Deep Blue supercomputer beat Grandmaster Garry Kasparov at chess in 1997. We were impressed in 2011 when IBM’s Watson beat human champions at Jeopardy! and again in 2016 when Google's AlphaGo showed it had mastered Go, the ancient board game. Currently, we are so excited about Amazon's Echo digital assistant/home automation hub and its ability to recognize the human voice, that we are saying a machine has finally passed the Turing Test. Almost.”

The good news is over the seven decades, the AI community has gifted us a wide range of big words like deep learning, neural networks, cognitive computing and natural language processing.

Yale computer science professor David Gelernter thinks we have only scratched the surface. In his book The Tides of Mind, he calls it “the spectrum of consciousness,” which is “essentially a range of mental states through which all humans cycle each day. The cyclical element is crucial and underlies his metaphor of tidal motion. At the upper end of the spectrum, mental high tide, we are focused on the outer world, biased towards logical and abstract reasoning, and more likely to remember our experiences later. But as we drift down through the middle and into the lower reaches of the spectrum, we become increasingly conscious of the inner worlds of memory, prefer narrative to logic, and cross eventually into the difficult-to-remember realms of dreams.”

But we are told this time it is different. We can train machines with the gobs of Big Data we have been collecting and we have computing power in the cloud like we have never had before.

But do we really have enough of each? Listening to Ginni Rometty, CEO of IBM at Dreamforce last month (see interview below – Marc Benioff has always been a very respectful interviewer, and Ginni is in fine form), I have my doubts. Ginni makes the point that 80% of data is not searchable. I would argue that ratio for enterprise data is even higher. Most useful data is locked up in on-prem systems. Getting permissions to have broad samples of such data will be no easy feat. Then you have the issue of semantics and master data rationalization across the multiple sources of data. We are only now seeing early versions of natural user interfaces by training machines around decades of voice/accent data collected by the likes of Nuance in transcriptions ,voice mails we have been leaving each other since the early 1980s and photos we have been uploading into the cloud.

Ginni is also preparing us for a world of quantum computing because for a growing range of scenarios even today’s supercomputers (or cloud infrastructure) are not enough. Take the trajectory of weather forecasting. Decade after decade, data sets have become larger with satellites, buoy sensors and Hurricane Hunter type sorties collecting data on moisture, temperature, wind speed and other metrics. The modeling has become way more complex. So, the thirst for ever increasing compute capacity continues. Forecasts keep getting better and better – but tell that to many of my fellow Floridians who evacuated multiple times as Hurricane Irma made a mockery of most forecasts. As a renowned meteorologist said “I was very surprised not by how one model was going back and forth -- but by how all the models were going back and forth.” Exactly, now wait till Salesforce's Einstein and IBM's Watson start contradicting each other :) Customers are being told they need both.

Ginni does not overtly talk about it, but 50% of IBM revenues come from services. Go ask early Watson healthcare clients how much of the tab was in services. IBM's interest in Salesforce's AI tool, Einstein is being driven by its Bluewolf services unit. Amazon offers its engineers as consultants via its ML Solutions Lab, Google via its The Machine Learning Advanced Solutions Lab. We will need highly skilled labor to train the machines. And we will also need tactical labor to keep refining the data. Amazon has its talent networks – the Kindle author, the Flex courier, the Mechanical Turk and fulfillment networks it can mine. Apple has its iTune and iOS networks to draw from.

Enough usable data, enough compute, enough talent? Take a hard look at each from the lens of your AI project.

Far more tactical implementations of Robotic Process Automation (RPA) are more promising. RPA is not machine learning, it uses software bots to mimic human activity – like logging in to a system, copying and pasting data across systems. The payback is much lower than what AI/ML promises, but it removes the drudgery and increases productivity of many white collar jobs.

“Think of the impact of this on real estate requirements. I can take what would need offices in six large buildings and put them on two racks. I can help consolidate global offices. A cognitive bot can process an invoice in 30 languages—I don't need centers in the Philippines and other centers in Japan to deliver diverse language skills. Think of the employee recruiting and onboarding time we can help save.”

It is a more traditional definition of savings that comes with automation, and far more realistic. But even there, many services firms are pushing RPA which is a bit of a red herring when it comes to implementation costs.

Of course, many companies are being deluded by the promises of AI (and broader automation). J.P. Gownder, a Forrester analyst says if you don’t have realistic expectations “You’ll be inclined to automate too many roles — at the expense of both customer and employee experience. You won’t hire the right mix of new roles— or any new people at all.” In other words besides seeing poor payback from your AI projects, you may hurt other critical parts of your business.

On the flip side, we may not need to worry as much when Elon Musk says AI is more dangerous than N. Korea. Or when Prof. Hawking says AI will end mankind. The bad guys will face the same data, compute and talent shortages that AI for good is facing.

Tone down your AI expectations. And get ready for the next generation of AI big words.

Peter Diamandis, of Abundance fame, put out this rallying cry in a recent post. Renewables definitely need a kick in the behind. A recent conversation with my lawn guy, Bruce told me how far they still have to go.

I asked him if he had considered one of the new robotic, electric lawnmowers for a couple of thousand before he invested in his $ 16,000, gas-fueled 35 hp Gravely. He smiled and said “I can cut your front yard in less than 3 minutes. The robots are much slower and often run out of battery, and then you have to restart the cycle. Also lawn in Florida grows taller than what the robots can tackle ”. The conversation then turned to his set of DeWalt tools. He has a whole collection which run on lithium-ion batteries. Even there he said “I only use the battery powered blower at night to not bother the neighbors with the noise of a gas powered one”. On and on he went on why gas fueled appliances are still so much more efficient.

Bruce is smart enough but he uses simple phrases. He was saying energy density matters as much as economics. Renewables need to scale up.

The opportunity has been around for decades to kill Fossil Fuels, but renewables continue to rely too much on hope and fear

Country after country is announcing plans to ban gas or diesel fueled cars in the next couple of decades. Reason to celebrate, right? Yes, if you are blessed to live in countries like Norway and Canada where utilities get the bulk of their fuel from hydro. In most other countries, EVs are only marginally greener than cars in Brazil where 25% of fuel is cane-sourced ethanol. This chart from Our World in Data ( a project at U. of Oxford) shows how far renewables have to go just to replace coal usage in utilities. Add nuclear to that, given skittishness around that, and the opportunity for renewables is almost intimidating.

Another hope of the renewable sector is we will soon run out of fossil fuels. Tell that to bankers who plan to take Saudi Aramco public next year at a valuation between $ 1 and 2 trillion. Yes, it will be the world’s largest ever IPO. M. King Hubbert came close on his projections of decline in US oil reserves in graph below. But he did not factor the stubbornness of George Mitchell and other energy entrepreneurs and their fracking and horizontal drilling innovations. Yes, some day we will run out of oil. For now, renewables need to quit hoping that day is anytime soon.

Then there is the fear mongering. 2017 was a torrid hurricane season (it officially ended November 30) and all the boo-birds are out saying if we had moved to renewables we would not had such a ferocious time. Hello – since records were kept, 2017 was only the seventh most intense season in the Atlantic basin. And here’s another contrarian data point “Harvey ended the record-smashing 4,324-day-long “major hurricane drought” in the United States when it crashed ashore near Corpus Christi, Tex. And then it stalled, maintaining tropical storm status for 117 hours after landfall, a record for a Texas landfalling hurricane.”

It’s uncanny that for a decade after the documentary The Inconvenient Truth was released, we had that hurricane drought. Now that its sequel has been released, hopefully we will see another long respite

This time, last year I felt very lonely. In writing Silicon Collar, I was one of the few voices who is not pessimistic about automation killing masses of jobs. I kept getting asked, how can you ignore the rapid pace of technological evolution? I kept telling people adoption of technology has not evolved as rapidly. Society has its “circuit breakers” to too-rapid automation. Read about the century of automation I have cataloged in the book and how tens of millions of jobs have changed, but survived, in most sectors. Yeah, but this time it is different, I would hear back.

Last week, I finally felt some vindication. I was at a Cognizant event which celebrated work and workers. Even the background music was mostly about the joys of work. As a slide referenced, it was as Robert Plant of Led Zeppelin often called it “a song of hope”. There was nobody clamoring for a dole or Universal Basic Income. It was about how automation is transforming work or creating new type of work. And yes, it was good to hear themes common with those in my book. Automation targets 3D tasks – dull, dirty and dangerous ones. Work has been central to mankind for millennia. Our last names handed down for generations convey that fact. The handouts had emphatic statements like “But a world without work is a fantasy that is no closer to reality in 2017 than it was 501 years ago upon the publication of Thomas More’s Utopia.”

Oh, there was a lone dissenter – Prof Vivek Wadhwa who kept saying (without much data to back him up) that jobs are lost. His pessimism only made the pragmatism of the others stand out even more. And even he was optimistic about future of healthcare and renewable energy.

The Cognizant speakers like Ben Pring – most ex Gartner and Forrester analysts and now part of its Center for the Future of Work – unveiled 21 new jobs they believe technology will help create. The graph below summarizes them. 10 of the jobs are in B2C settings, the rest in B2B settings.

Some of the job titles are awkward sounding but each is believable. Who would not like to see a member of their family benefit from a “augmented reality journey builder” before dementia or Alzheimer’s potentially afflicts them? Who does not think we will need analysts who can help run our increasingly smarter cities? How can you argue with any of the jobs (which they say they identified from hundreds of candidates) all of which carry some element of coaching, connecting or caring? This 60 page white paper describes each of of the 21 jobs in some detail.

Another session had Danish serial entrepreneur, Dennis Mortensen, founder of x.ai, which has developed two AI driven personal assistants, Amy and Andrew which schedule your calendar. His humility was breathtaking. His highly focused bots have taken him years to build and mature. He did not expect AI to dramatically reshape the world of more complex work anytime soon.

A guest speaker was J.P. Gownder of Forrester. He had a nice framework for how work is evolving – machine-first, machine-human teaming and humans-first. Even in machine-first scenarios like at the Goldman Sachs cash equities desk, the number of traders has dropped from 600 in 2,000 down to 2. But now 200 software engineers support the automated trading. In contrast, in a human-first scenario, Autodesk is hiring novelists to write scripts for its chatbots. He had plenty of other examples of man leading or following machines or teaming with them. But each still has a human element.

To me, one of the best slides from the day was about this bell curve. While the day focused on the right of the curve and new jobs, I am much more heartened by the bulk in the middle that are being transformed by technology. I have written about roofers who are using drones and tools like EagleView. I have written about digital calipers, ring scanners and AR goggles on the shop floor. Gownder had examples like Robin Technologies which is bringing Roomba like robots to lawn care. Yes, as they improve in horsepower and battery life, they will take away the drudgery of cutting grass in the summer heat, but they will also allow the care taker to focus much more on landscaping. That’s what automation has always done – allowed humans to work smarter, safer and speedier.

I expect Cognizant to keep evolving its research on the topic. Try and catch a similar session like the one I attended in a city near you. It will inspire you or at least make you feel less morbid about automation. And the music will certainly cheer you up.

Stacey Harris sent me a preview copy of the Sierra-Cedar annual HR Systems survey. It is the 20th edition, and I particularly enjoyed the walk down memory lane when I was following HR applications at Gartner.

“20 years ago, David Link and Alexia (Lexy) Martin, the first authors of the HR Systems Survey, embarked on a journey to understand a new and emerging trend of self-service HR: the idea of giving candidates, employees, and managers access not only to data, but also to tools that they could use to help make decisions and improve their work environments. The Internet was in a state of infancy, and most organizations were still working through mainframe versus client-server application discussions. With Y2K just right around the corner, and all of the anxiety and optimism coming with the start of a new century, the industry was ripe for change. “

Get a copy of the report here for the nostalgia if you will. But especially do so for the chock full of data on the HCM market. There are 121 graphs – on average one a page. They cover wide ground from cloud adoption by HR application area, to HR analytics to mobile and social HR tools. Some of the data will surprise you – like how low cloud penetration is in many areas even though HCM has led other functional areas in cloud adoption.

After my last book, Silicon Collar about automation, I get the sense HR is in for a huge change over the next few years. Automation via AI, robotics, drones, wearables – is changing the nature of work in every profession. We will see new job titles emerge we did not anticipate just a few years ago. More of the workforce will be on platforms, in franchises and other “extended enterprise” formats. Workforce planning will increasingly factor in machines and related asset planning and maintenance. That will have a Big impact on recruiting, learning and every other aspect of HR.

I have a feeling the next few Sierra-Cedar surveys will increasingly reflect those changes. In the mean time, back to digesting all the data in the latest one. I look forward to more nostalgia as the survey reaches its 25th birthday.

It would be easy to be pessimistic about SAP when you read Dennis Howlett’s recent blog “It’s a hot mess and everyone, whether that is SAP, customers, partners or User Group people want it to go away. The issue comes in finding a solution.” The “mess” is what used to be irritation at individual SAP customers about Indirect Access audits. It is now a full blown crisis. Dennis writes “I was shocked. I have never heard customers so angry at a vendor as I did at this event”. I have heard the anger in my consulting for years now. Customers thought IA was very unfair, but some would grudgingly agree the greed was not confined to SAP. Other enterprise vendors had their own sneaky practices. But to a person they would “punish” SAP by not inviting them to future business for a couple of years. I am convinced for every dollar SAP collected in IA, it was precluded from bidding for 5x in new business. But it was isolated to those customers who went through the ordeal. Now, I hear it from every SAP customer and if all of them decide to punish SAP, it is like I said a crisis.

It is one of several “unforced errors” I have seen SAP make as I continue my research for SAP Nation 3.0. CEO Bill McDermott acknowledged the problem in his keynote at SapphireNow in May. All of SAP should have rallied around his promise of a solution. 6 months later there has only been dribbles of information about it. SAP needs to treat it like a crisis.

The other unforced error SAP has been making is exaggerating S/4HANA success. It claims 6,500 customers but still cannot show detailed product road maps prospects can believe or show adequate reference early adopters.

Not sure why it feels the need to exaggerate progress on S/4. In SAP Nation 2.0 I profiled progress of several next-gen products and I wrote “As we have seen earlier with Oracle, Microsoft and JD Edwards, a next-gen product takes years of development and maturation. Migrating a legacy customer base takes even longer. Those are just the laws of physics. SAP may be able to bend them slightly with S/4, but will likely not be able to break them.”

Worse, SAP partners are trying to get customers to repeat the sins of the last wave of R/3 and ECC implementations. They are telling customers to implement the (relatively more mature) financial modules of S/4. That is the mistake so many SAP customers made in the last go-around. They would start with financials, run out of funds and never get to the operational areas. And when they did they found the functionality much weaker than they had expected.

Between IA issues and S/4 claims, SAP has a credibility problem in the market. As an analyst told me “I wish Hasso Plattner was in every conversation with SAP. You would get a truthful answer pretty quickly”. That is a huge tribute to Hasso, but also an indicator of how little faith people have in what they hear from the rest of SAP.

But……don’t write off SAP just yet.

While I see just about every SAP customer adopting one of the “coping strategies” I had written about in SAP Nation – ring fencing with clouds, third party maintenance, two tier ERP with lighter alternatives etc, the core of SAP is still reasonably solid. They are still the book of record for utility billing, retail merchandising, oil and gas accounting and countless other vertical applications.

None of the competitors – Oracle, Workday, Salesforce, Infor, others – has made a major dent in the vertical areas. They could have gone for the kill but have been content to focus on horizontal areas like HCM and CRM.

And there with its cloud acquisitions especially hybris, SuccessFactors, Concur and Ariba, SAP has managed to stay competitive in many horizontal areas.

Another trend is also helping SAP. I see a number of customers keeping their legacy, on-premise applications in place and adopting a series of “intelligent apps” around them which leverage sensors, machine learning and other contemporary technology and data sources. SAP’s Leonardo toolkit is a gateway to that world.

So, I continue my research for SAP Nation 3.0 with that guarded optimism. I hope SAP gets the “spirit of Hasso” back into the field. It needs to become more of the product company it used to be, less the sales machine it has become.

You hear about digital projects at their clients, but you don’t hear much from outsourcers about their own transformations. Cloud competitors like Amazon, contract manufacturers like Foxconn and digital agencies have dramatically changed the landscape of services. So it was refreshing to spend some time recently with Raj Mehta, President of Cognizant, to discuss their internal realignment. He assumed that title in September of 2016 after a career in various field roles.

Here are some excerpts from that conversation:

“We were hearing from clients their needs were changing. They did not need large testing factories. They wanted to leverage automation trends. They did not need as big a BPO operation. They wanted more Cloud, Agile and Digital. And they would come to us and complain they had to go to individual practice areas to share their vision. Cognizant was not organized enough around the way clients were thinking.”

“We embarked on a 2020 vision project and realized we had not re-organized since 2009. The world has changed so much since (see graph above with 2015 figures from that strategy document).

“We have been executing against that 2020 vision and are now organized around three service lines aligned with our various digital opportunities (see graph below). They leverage our industry expertise in verticals which we have traditionally been strong, like financial services and healthcare, our consulting/strategy groups (which is now much tightly integrated with our vertical and horizontal units) and (our) much larger global footprint. Our Accelerator has been making more venture investments, including one in a startup called Measure, which offers drones-as-a-service. The Global Technology Office (GTO), our R&D arm, is also more aligned with the Accelerator."

“It’s easy to say we’ve organized around these three service lines - Digital Business. Digital Operations and Digital Systems & Technology. To change a two hundred and sixty thousand person organization, it’s a big ship to change. We had to change the metrics on which our units are measured and how they are structured in terms of leadership. So, in our traditional model you heard us talking about two in the box. We’ve made our client partners more consultative and complemented them with traditional engagement and delivery leadership. We are on a journey – I cannot say we are done, and it means always making sure we have the right people in the right roles.”

“We are delivering a variety of new digital services. We’re heavily engaged now working with auto manufacturers not just looking at their supply chains. Helping them design their (vehicle) displays, designing new features, what are the types of – how do you display these units, right? So, more focused human interaction on the digital side. Or the drone investment – how can insurance, telecom companies leverage drones. Robotic Process Automation (RPA) for a number of clients. So, you’re starting to see us in new areas than you would have in the past.”

“Look at the opportunity around digital healthcare. A large percentage of all Medicare/Medicaid claims go through our Trizetto platform. We have visibility through the whole supply chain from consumer to the providers, the pharma companies and the payers. Now overlay the wearables we are all adopting. I hope with all that data and where I’ve been traveling and which planes I’ve been on, the chances are pretty high we can tell I may get the flu bug in the next three days!”

“If you look at new business models, we are going to clients with outcome-based thinking. Take application management - it’s a totally different conversation than just the traditional on-site/offshore managed services. So, how can we bring down your cost over a period of time by retiring some of your applications, moving others to the cloud, and give you an application-based pricing model?”

“We have been telling clients for a while to Run Better, Run Different. Cognizant has the opportunity to do the same. How do we run our large HR operation more intelligently? How do we manage our attrition, how do we better manage (our) talent pools around the world, and how can we leverage automation to help us make those kinds of decisions?”

‘The timing has been fortuitous. We had an activist investor (Elliott Management) and we have agreed to improve our margins over the next couple of years. Our realignment, already underway, helps me – as you can imagine, by bringing a lot of these units together, it helps me free up a lot of dollars internally.”

It was a really interesting conversation and hope I can spend more time with him and write a case study about their digital transformation in an upcoming book.

I get invited to a number of user conferences. I must admit I often feel I am intruding there on customer time with vendor executives. I much prefer smaller analyst summits and Plex has honed such summits to an art form. They always showcase something from their lab and they always take us to a live customer factory tour.

The summit this week was no different. The Edge corporation - their demo shop floor was supplemented this year with glimpses of early thinking around IoT on the shop floor (leveraging PTC's ThingWorx), natural user interface (showing off RealWear's HMT-1 Helmet which incorporate's Kopin noise cancelling technology ), and Augmented Reality on the shop floor (with Microsoft HoloLens)

The live factory visit was at the St. Clair Shores plant of Fisher Dynamics. Fisher is a seating-systems and mechanisms company which will make 50 million seating assemblies this year. It is a fourth generation family owned, global manufacturer. Besides the tour it was good to hear about how seats will evolve in a world of autonomous cars. To me it is always educational to see customers walk you through nuances of their implementation of a vendor's software.

But the biggest change this year was the summit was co-mingled with the periodic meeting of Plex's customer advisory board. At dinner and through most of the day we sat next to CEOs, CIOs and operational execs from 15 Plex customers with revenues ranging from $25 million to over $3 billion. With refreshing transparency we heard Plex's financial plans (Petri Oksanen from the lead investor, Francisco Partners led most of that discussion), product plans and customer feedback. In side conversations there was plenty of talk on likely changes to NAFTA, automation and jobs, lots of practical talk about what the Fourth Industrial Revolution means to the shop floor. The summit lived up to its billing as the Future of Manufacturing Roundtable. I hope the customer execs enjoyed it as much as the analysts did and hopefully we were not much of an intrusion.

On a personal note, I was invited to be part of the Plex all-company meeting which also coincided with the summit. It was exhilarating to be with over 300 excited, motivated Plex employees and tell them it is so nice to see an ERP vendor which actually focuses on gritty shop floors not just clean, white collar functions.

Plex keeps raising the bar for analyst summits. It is refreshing for industry analysts to be able to communicate directly with customers and investors. I reach out to them all the time for my books and blogs. But usually I do so on my own not proactively facilitated by a vendor. When a vendor facilitates that it is a sure sign of their confidence.

Dreamforce always has a feel of a political convention. You almost expect to see signs directing crowds to the LGBT or Pacific Islander caucus room. This year, watching it streamed I have been navigating through sessions titled with words like “diversity”, “equality” and “authentic leadership”. In his opening keynote, CEO Marc Benioff welcomed thousands of nonprofits and NGOs and the Monastics who are doing a session on “mindfulness”. Hollywood is always represented. This year Ashton Kutcher did a moving talk on child trafficking. So is Washington, DC. Bill Clinton and Colin Powell have presented in the past. This year Michele Obama and President Bush’s twin daughters are presenting. There are musicians galore. Will.i.am is a regular. There are thoughtful sessions like a panel of CEOs discussing automation and impact on jobs. In contrast, there are endless juvenile comments laced with words like super, awesome and cool.

Somehow it works. I wrote in The New Polymath

During a customer panel at salesforce.com’s Dreamforce conference in November 2009, at one end of the table sat a ball of color—D.A., of the indie band Chester French, with his bob of red hair and purple trousers. At the other end was Joe Drouin, ClO of Kelly Services, which places 650,000 contract staff around the world, in a dark suit and white shirt. Quite a contrast in size of customer and dress code. That’s Benioffs democracy in action.

With today’s politically charged environment, many events have moved to neutral, bland formats. Dreamforce has gone the other way.

Not everyone is a fan. My friend Ray Wang tweeted

MyPOV: sometimes it would be nice to be at a tech conf where the program is about the tech not the politics and social agenda of CEO #DF17

Another analyst told me when there are so many “filler” sessions it is a sign a vendor does not have much to discuss about their products or strategy.

With 2,700 sessions I think they can have plenty of both. Marc is a big boy and knows the risks he is taking and if the format will hurt him with customers or investors.

I can safely say this focus on what Marc calls “core values” is helping their recruitment. I have been impressed to see so many confident African-American ladies on stage. So unusual in tech. In turn their comfort and confidence is likely helping attract others. James Governor shared with me one such story.

I have long believed that employers who are racist, sexist, ageist hurt themselves by artificially limiting the labor pool they are open to. Salesforce is the opposite. Watching a CEO openly welcome the “rainbow coalition” has to show up in a wider diversity in applicants. Good for them, and ultimately good for their customers and investors. So long as the majority of the 2,700 sessions and the company continue to stay focused on product and direction.

My blogs, now 12+ years old, my 6 books and much of my consulting in those years have cataloged and celebrated cloud computing, renewable energy and digital transformations. I have been a big booster of each, but think we are at a point with each where we need to ask for much more.

In Part 1 I covered cloud computing and in Part 2, renewables in the energy sector. Now let’s look at the phenomenon of Digital Transformations.

People talk as if “digital” is a recent phenomenon. Steve Jobs known for his string of amazing Macs and iPods and iPhones actually contributed more to the world with his digitization of art at Pixar, codecs which delivered hi-def music in the iTunes store and other digital form/factors. The progress we are seeing with machines and Facial Recognition and Voice Transcription are a result of decades of digitizing images and accents. Marty Groover, an Operational Technology Manager at Caterpillar which has been reimagining the factory with IoT and robotics told an SAP event recently “we have been going digital since the 1980s”. He called his project a Business Transformation project, not a Digital Transformation.

Another of my peeves is we have too many consultants with what I call low “digital credibility”. They use Borders, Blockbuster or Kodak as examples. Executive eyes rolls as they hear yet another vendor try the FUD “If you don’t work with us, you will get Amazoned or Netflixed”.

Far better to talk about “digital phoenixes” which have gone through traumatic times and bounced back. On the New Florence blog, I have examples of technology and Lego, Marvel, BP salvage operations after the Gulf spill, how railroads have been reborn. In my books,I have examples of how Aircell has been reborn as GoGo the wi-fly service, how Delta Airlines has reinvented itself with technology, how GM’s OnStar has repeatedly been recast, how Corning seems to have major impact on mainstream technology every decade or so and others. Many of these examples started their digital transition a couple of decades ago.

Malcolm Frank at Cognizant implores audiences to do “Digital that Matters”. If you are doing a digital project and you are not making your products smarter, rethinking your business models and customer channels, rethinking your plants and supply chain, you are likely doing small “d”.

Technology has long focused on efficiencies and cost savings. Today, it allows for a top-line, revenue focus, yet way too many projects define their scope too narrowly. In that sense we are repeating a sin from the mid 1990s. Dr. Michael Hammer was a rock star in the early 90s with his reengineering books and articles. His rallying cry was “Don’t automate, obliterate”. In just a few years, that zeal had evaporated. ERP vendors and systems integrators convinced companies packaged software defined “best practices”. Just implementing the software would be “reengineering in a box”. It was not, and many companies ended up in worse shape because of the massive ERP overruns. Others just updated their corporate HQ functionality and forgot about their R&D labs, their shop floors, their logistics. We risk similar with today’s narrowly defined digital projects

For years now, pundits have said technology budgets are being taken over by the CMO. That is their narrow definition of digital – implement a social sentiment analysis technology or roll out a mobile consumer focused app. Much better payback has come from the product side of the house. It is not unusual to find in auto makers more software engineers who report to product engineering/R&D than do to the CIO. It is not uncommon to see in companies seriously making their products smarter that the spend with contract manufacturers like Flex and Foxconn and product design firms like IDEO and Frog exceeds the spend with IT outsourcers and strategy firms.

And even if you do small “d”, a common mistake it to just look at packaged software vendors and one of their services partners. My colleague, Brian Sommer and I have been researching what we call “custom-crafted” processes. With SMAC (social, mobile, analytic, cloud) software and increasingly sensory, automation, blockchain technology you can custom design processes which are much better aligned with your changing industries. The big learning we have realized is if you go down this path you cannot just do that just once. For best results, you have to continually upgrade it like a packaged software vendor would to keep up with newer waves of technology and changes in your industry.

At best, your digital project will dramatically reshape your top line and your organization’s competitiveness. At worst, you will repeat the mistake of the 90s and end up with newer technology but not much better processes or efficiencies. Raise the bar for your digital project. Think Big D.

My blogs, now 12+ years old, my 6 books and much of my consulting in those years have cataloged and celebrated cloud computing, renewable energy and digital transformations. I have been a big booster of each, but think we are at a point with each where we need to ask for much more.

In Part 1 I covered cloud computing. Now let’s look at renewables in the energy sector. While clouds have been targeting on-premise systems for a couple of decades, renewables have been targeting fossil fuels for much longer. After the 1973 oil crisis, Brazil began promoting bioethanol from its sugarcane as a fuel for driving. Even after a much later start, the US has been the largest producer of ethanol from its corn since 2005. The first electricity-generating wind turbine was invented in 1888. Photovoltaic cells for solar energy started even earlier in 1876. Yet, by many metrics, renewables have not done as well as clouds replacing the incumbent.

Renewables missed out on a significant wave of utilities which went from coal to gas in the last decade. They have also not made much of a dent in energy consumed by the transportation sector – airlines, shipping, trucking etc. They have missed out on blanketing with solar panels the US south and southwest with its plentiful sunshine.

Renewables have historically depended on an emotional sale and governmental support. Their competition is not exactly popular – try to find many fans of OPEC, Big Oil and Dirty Coal. But the renewable industry harps on that. Elon Musk, widely respected for his work on electric vehicles and solar batteries, recently said on a trip to Australia “And we will have the choice of the collapse of civilization and into the dark ages we go, or we find something renewable." Dark Ages? Sounds like he is trying to match US Energy Secretary Rick Perry for sensational comments. Or the usual scare talk around Climate Change. Living in Florida, I hear talk of more frequent and ferocious hurricanes. Reality check: we had a decade where No hurricane made landfall. Disruptive as this year has been to Texas, Florida and Puerto Rico, this hurricane season may not even crack the top 5 most active (the season ends in November). Or the positioning of Electric Vehicles as “clean”. They are clean in Norway or Canada where hydro sources contribute most of the fuel for their utilities. In the rest of the world, utilities we depend upon to charge the EVs still largely depend on fossil fuel.

Renewables are getting another major shot. Companies like Google have been signing over the last decade Power Purchase Agreements (PPAs) - large-scale, long-term contracts to buy renewable energy. China and India are adopting solar and wind power in large chunks. Puerto Rico making a fresh start on its electric grid after Hurricane Maria is seriously looking at renewables. There are many other big opportunities.

Renewables are getting this chance because the price of solar and wind has dropped very nicely in the last few years as this graph shows.

You can argue whether the chicken or egg came first. Or whether falling renewable prices are leading to greater demand or the other way round. I give credit to the US shale boom. That has not only kept global oil and gas markets in check, but also put pressure on renewable pricing. That's healthy for a balanced energy (and national security) policy for fossil and renewable fuels to counterbalance.

You hear a number of people talk about Peak Oil and raise the specter we are running out of hydrocarbons. I prefer to see it as a phase of Steady Energy. We are enjoying an equilibrium in the market. Renewables need to sell competitively in this market and get away from the emotional talk and over dependence on subsidies. Take advantage of the recent momentum and convert markets they did not in the last go around.

Next up, I will cover the hype and promise around Digital Transformations.

My blogs, now 12+ years old, my 6 books and much of my consulting in those years have cataloged and celebrated cloud computing, renewable energy and digital transformations. I have been a big booster of each, but think we are at a point with each where we need to ask for much more.

Let’s start with clouds which have been maturing nicely for two decades now. NetSuite and Salesforce were founded in the late 90s. AWS was born out of an internal Amazon project starting in 2000.

It’s been quite a ride. Earlier this year, I wrote

Salesforce has the honor of becoming “the first enterprise cloud software company to break the $10 billion revenue run rate". Amazingly, just a short 8 years ago I was blogging about its “second billion”. They have gone from strength to strength.

“Every time someone buys a server, a switch or a data center, I have failed”

The reality is even with every major and minor vendor offering some version of cloud, 75% of CIOs are still buying servers, switches and data centers. Part of the challenge is cloud applications have largely focused on horizontal processes – accounting, procurement, CRM, HCM etc. Industry books of record – utility billing, retail merchandising, hospitality reservations, healthcare patient records, insurance claims processing, advanced manufacturing shop floors and most others - are still on-premise.

Every industry event, I ask cloud vendor CEOs why they all focus on the crowded horizontal space and ignore so much of the white vertical space. They all have good reasons – not enough customer scale in individual industry applications, they are building industry features and analytics into their horizontal capabilities, they have partners working on industry extensions. The reality is those messages are not resonating - customers continue with majority of their industry applications in legacy, on-prem mode. In SAP Nation, I described the “ring fence with clouds” strategy a number of customers have adopted. The ring-fence by now should have spread to the living room, but it’s still on the edges.

Geography is another challenge. Europe, Asia and other continents significantly lag N. America in cloud adoption. While they have cultural and regulatory objections to the cloud model, most vendors have not customized, or spent enough selling outside the US.

When it comes to infrastructure, clouds have done a nice job penetrating development and test environments, much less production environments. We need many more Netflix examples where Amazon or Microsoft or Google is their “data center”. Or even Oracle and IBM which have long term understanding of so many customer IT nuances. And the waters are muddied as virtualized machines on-premise are being positioned as private clouds.

Another area of promise continues to be the ability to benchmark across wide populations of customers on cloud platforms. The reality is much useful data is locked up in their on-premise systems and we don’t have consistent master data definitions.

While the unconquered vertical, geographic, data center and benchmarking markets reflect the next big opportunity, a growing concern is that of cloud economics. Things were so promising just a decade ago. I cited Timothy Chou who started Oracle’s online unit in the 90s in The New Polymath

“The average enterprise application costs over $1,000 a user a month. Most company’s IT budgets are now fully allocated to managing the software they bought over the past twenty years.

Now if you take that same software and standardize the delivery, you can get the cost to under $1oo a user a month. And furthermore if like sales force.com, Concur, Taleo, Successfactors, or NetSuite you engineer applications for even higher degrees of standardization, then the cost (not price) goes to $10 per user per month. But that’s not the end of the story—back of the envelope; Google’s cost to deliver is less than $ 1 per user per month.”

There was also excitement about low capex, and the variable IT cost model of cloud computing. That has gradually been eroding. Now cloud vendors expect multi-year contracts, and hardly deliver any productivity across those years. Six Sigma and CMM are not terms you hear at many cloud vendors. So, clouds have become another fixed IT cost.

Amazon started off very well, delivering price cuts just about every quarter. But now, managed services partners have jumped on the bandwagon and dilute its attractiveness. Salesforce is actually confirming its service partners make $ 4 to 5 for every $ 1 it charges. Not very comforting to customers who thought that went away with on-premise systems.

It gets worse. Customers are now in mixed-mode with some of their applications and infrastructure in the cloud, the rest on-premise. Others are seeing their infrastructure now fragmented across multiple clouds. All this means increased integration costs and duplicative support resources.

I find most investors focused on clouds as a mature market and demanding when it comes to ARR and other metrics, when they should be encouraging more R&D to get into the white spaces. They are also allergic to capex investments. Here’s the irony – clouds promise to reduce customer capex. The vendor has to pick up the capex load. There is no imaginary banker to fill the gap.

I remain a big fan of the cloud model. But like my friend Frank Scavo likes to say “You don't get a pass just because you're SaaS.” Cloud vendors will have to step up – in broadening their reach and in recommitting to the economic model which made them so attractive to adopt. Buyers and analysts like me need to keep the pressure on cloud vendors.

Plex has a neat publication for the new world of Advanced Manufacturing (see many examples in the resurgence that Greenville, SC is showing as a factory town) and where we are seeing the Fourth Industrial Revolution. Plex calls it Connected Manufacturing.

They sent me a glossy copy, but anyone can download a PDF version here

I am quoted in the publication

“Connected Manufacturing is about putting the modern shop floor with its robotics, sensors, wearables and 3D printing at the center of your business universe. Doing so allows you to deliver much smarter products, delights your customers with highly personalized offerings and turbo charges your supply chain.”

While most ERP systems have their genesis in the MRP world, most have drifted away from the shop floor and largely deliver back-office, corporate financial, procurement and HCM functionality and emphasize their cloud delivery models. Don’t expect to get from just that the massive efficiency advanced manufacturing sites are reporting.

They come in threes, don’t they? In the last week, I have read three pieces which have my hype antenna buzzing about Salesforce

IDC in an annual study commissioned by Salesforce says the ecosystem of customers and partners will drive the creation of 3.3 million new jobs and more than $859 billion in new business revenues worldwide by 2022. In addition, by 2022 the Salesforce partner ecosystem will gain $5.18 for every dollar Salesforce earns. To generate revenue you need a product, you need a business model, and you need a customer channel. You need more like a strong brand but let’s stay with those three. Salesforce does not help companies build products or services. Foxconn, Flex, IDEO and many Tier 1 and 2 suppliers do. It does not help you with your business model or order entry or billing. It does help you with your channel, but far less than you may think. It helps with direct sales force automation, much less with resellers, franchisees, store or ecommerce sales. It helps with digital marketing but the world still spends way more on trade promotions and analog advertising on TV, billboards and other media. So taking credit for generating customer revenues seems to be a stretch. As for the ecosystem, 5X for every dollar spent on Salesforce is actually not something to be proud of. Because that does not include internal staffing costs customers need to factor on top. Pretty soon you are looking at SAP Nation type numbers. For a very small part of the enterprise coverage SAP gives its customers. I am not sure why Salesforce brags about that and keeps showing larger numbers every year.

John Sumser is his recent report on “intelligent HR software” comments “We were unable to find actual Al, but that doesn’t mean that the work is not important—it means that calling it Al distracts from the value that these companies are creating.”. Bluewolf, now part of IBM, has issued its sixth State of Salesforce report and should have heeded John’s advice. The report is intensely focused on the term AI. I would have liked to see actual, real life use cases. It is light on such examples but does cite how AI from Salesforce and IBM helped in creation of the report itself

“….we asked Einstein to analyze specific data sets to discover patterns based on demographic information, including region, role, company size, and industry, and to quickly capture trends among Sales, Service, Marketing, and IT respondents. Simultaneously, IBM Watson Discovery scanned news sources, attaching a sentiment rating to the top trends we identified by using Einstein Data Discovery. These analytics enabled us to validate insights from the data.”

Isn’t that good use of analytics, not AI? Frankly, I would like to see how IBM/Bluewolf are using AI to streamline their own consulting labor and to reduce the 5X cost IDC describes above.

Now on to the hype. To make sure you realize AI is hot, the report uses the term AI over 75 times in its 66 pages. As an innovation author, I was excited to write about advances in AI in my book on automation, Silicon Collar. But I also pointed out we just make incremental progress every few years.

“(1950) is when Alan Turing defined his famous test to measure a machine's ability to exhibit intelligent behavior equivalent to that of a human. In 1959, we got excited when Allen Newell and his colleagues coded the General Problem Solver. In 1968, Stanley Kubrick sent our minds into overdrive with HAL in his movie, 2001: A Space Odyssey. We applauded when IBM’s Deep Blue supercomputer beat Grandmaster Garry Kasparov at chess in 1997. We were impressed in 2011 when IBM’s Watson beat human champions at Jeopardy! and again in 2016 when Google's AlphaGo showed it had mastered Go, the ancient board game. Currently, we are so excited about Amazon's Echo digital assistant/home automation hub and its ability to recognize the human voice, that we are saying a machine has finally passed the Turing Test. Almost.” There are plenty of other reality checks in the book.

While the two above were commissioned by Salesforce or a partner, they likely only provided fodder for the third one, an article from Business Insider on preparing for Dreamforce next week. 1,000+ words later you will not have a clue about product direction or announcements, but you get invaluable advice like “Plan to party hard” and “ Pack a portable charger – or two”. Whatever, but the hype comes in the disclosure that the event will offer 2,700 sessions and attract 170,000 attendees. Oracle OpenWorld had 2,500 sessions and 60,000 attendees and they offer a much wider range of IaaS, PaaS and on=premise products. And navigating 60,000 attendees was exhausting enough. 3X that? Who exactly do they think they are impressing? Especially when the article warns you to be prepared to pay $ 900 per hotel night.

I will try and catch some live-streamed Dreamforce sessions and hear what my fellow analyst colleagues have to say. Some day soon, I hope I can get briefed by Salesforce in a much smaller setting. And hopefully without all the hype.

At Oracle OpenWorld, Letty Ledbetter set up several interesting breakout sessions for a handful of us analysts. One of the more enjoyable ones was when Reggie Bradford, SVP described their Cloud Accelerator program.

Located in Bangalore and Delhi in India, Bristol in the UK, Paris in France, São Paulo in Brazil , Singapore and Tel Aviv in Israel, the selected startups benefit from: • Access to the Oracle IaaS and PaaS and the R&D team • Engagement opportunities with Oracle’s 400,000÷ customers

Unlike other incubators or accelerators, Oracle does not take equity. Reggie had with him two of the entrepreneurs in the first batch, and I had a chance to follow up with both.

Paul Archer is Founder & Managing Director of Duel. Based in the UK, Duel is focused on enhancing brands. Using machine learning and vision tagging, Duel engages customers post-purchase and rewards them for creating visual testimonials. The service helps turn customers into brand ambassadors, content creators and advocates — and manages, amplifies and moderates it for brands at enterprise scale.

Here are some of his comments

One of the most memorable points of that trip was a visit to Larry Ellison’s Pacific Heights residence with some of the other accelerator startup executives. He spent a couple of hours with us and really seemed to enjoy being around us young entrepreneurs. There were plenty of stories about the good old days when they started Oracle. We covered a lot of ground from his deep interest in biosciences to scaling your talent as your company grows. Definitely a highlight of my week at OOW.

At our small size today, we likely would not have looked at Oracle as a development platform. However, I think now that is clear that that's not the case - we will be using their technology and we'll be adding service that we need, and at our level too... and at our price points too, which is really exciting.

We have been working with Oracle’s industry/innovation advisors who are working with major clients like an external consultant would. So, we're very nicely positioned to work with those guys to get in at the right level.

There's corporate bureaucracy at any company and certainly at one the size and scale of Oracle. But we have seen the accelerator bulldoze through the barriers

We have barely been on the market for a couple of months with our e-commerce proposition. Even so, we're able to command a decent amount of VC meetings because they know that we've got the backing of Oracle, and if they ever want to do their due diligence we can pass them on to some of the senior guys in the team in Oracle

In a follow up note, I will cover my conversation with Asaf Eldad of 3DSignals from Israel.

I recently wrote from Workday Rising about the Age of Intelligence. It’s not just Workday which has been busy. John Sumser of HE Examiner has a study which looks at intelligent tools at Workday and 29 other HR-centric vendors.

He has some interesting observations and caveats including

We began the report as an investigation into Artificial Intelligence. We were unable to find actual Al, but that doesn’t mean that the work is not important—it means that calling it Al distracts from the value that these companies are creating.

We considered describing the tools as “machine led decision making,” because the services (save one) all deliver recommendations and guidance. There is a fair chance that those recommendations will be implemented without much consideration. Who can argue with a machine? And how would you do it?

While there is clear value in reading what he has to say about each vendor, I particularly liked his simple, cogent definitions of Machine Learning, Robotic Process Automation and so many other terms which get thrown around when you talk about today’s AI and analytics.

Even more, I liked 21 use cases he covers in the report. including a sample above.

My wife has already had it with digital assistants. Alexa seems to wake up to the inflections of her Irish accent. Siri to mis-pressed buttons in the car or her phone.

I am a bit more patient but I also expect just a bit more. Here’s a few recent episodes where I could have used an assistant

- On a long drive I wanted to hear the NFL Bucs game. So I scanned the AM channel spectrum on the radio. No luck. That’s where all the sports and talk shows reside, don’t they? About to give up I stopped and Googled and found it on a FM station. Would have been nice to just say “Siri, play the Bucs game”

- During the ALCS game last week, I saw the game was on FS1. Tried the cable channel. They had our hockey team playing. I tried Fox, ESPN, other channels. No luck. Tried the Fox to Go app on the tablet. No luck. Downloaded the MLB At Bat app – only had a radio broadcast. Finally signed up for a trial subscription to Fubo TV and watched the game on my laptop. Would have been nice to just yell at Alexa on my Fire TV Stick “Play the baseball game” and for it to be smart enough to say “Now make sure and cancel the trial Fubo subscription. It’s not cheap at $ 39.95 a month”

- Avis rented me a Volvo XC60. I swear it took me 10 minutes to punch in the address on the nav using the buttons on the console. A touch screen would have been nice. Even better I should have just dictated the address to the car’s assistant. More recently one of their Toyota RAV4s displayed a steaming coffee cup message suggesting I take a break from driving. I would have liked for it to have answered my question “Is that because I have been driving too long, or do the sensors on the steering wheel suggest I am swaying too much?”

Our expectations are about to explode.

Independently, our two kids setting up new places went and bought TCL TVs with built in Roku. It’s their gateway to Netflix, Hulu, Amazon Videos, YouTube Red and who knows what else. We are going to need assistants to help us navigate all the choices. Accessible via our remote controls.

The Smart Home is starting to take shape. Video Doorbells, Smart Sprinklers, Keyless Locks and many other devices are populating our homes. We will need assistants to help configure and repair them. Accessible via speakers.

My wife and I have different Hyundai SUVs. The rear camera display is different, the proximity sensors set off alarms at different times, the navigation system UX is almost completely different. Same manufacturer, same feature sets. Now extrapolate that to all the new safety features as carmakers roll out the many driver assistance features already available in the Audi Q7. We will need assistants to guide us through these choices. Accessible, right there, in our cars.

As we have seen over and over in the last decade what we experience at home influences our expectations of enterprise tech. They are already starting to introduce their own assistants like SAP with CoPilot. They will be expected to navigate many more systems to find us answers. And we will expect them to be accessible in our offices, our cars, our flights and our homes.

I seek out Denis Pombriant, a fellow analyst, at industry events. We hardly ever talk about enterprise software. He is a history buff and a foodie and I walk away always having learned something and happier given his cheerful disposition.

Given his prodigious knowledge of US history I called him when I was writing Silicon Collar and asked him why as a society we go through “panic attacks” every few decades about automation causing catastrophic job losses. He explained that by talking about K-waves – Kondratiev’s long -term economic cycles.

His new book expresses optimism about the world of renewables and sustainability from his perspective of a K-Wave for the next few decades.

First a personal pov: As an innovation author I have written about Kleiner’s cleantech portfolio and Facebook and Google’s hyper efficient data centers in my books and I have countless blogs on New Florence on EVs and renewables. But I am not dewy-eyed about renewables. I believe in energy diversity for national security reasons. I am impatient that decades after subsidizing corn for ethanol, home solar salebacks to utilities and other incentives renewable energy still scales only so gradually and has hardly made a dent in our commercial transport sector. And I smile at the guilt trip people set us on – see the frequency and ferocity of hurricanes this year? Has to be all the carbon pollution. Hello, I live in Florida and for a decade after Al Gore’s scary book and movie, NO hurricanes make landfall. I am hoping for similar with his sequel. Disruptive as the 2017 hurricane season has been, it may not even crack the top 5 most active in history. Or the outrage that more of us in Florida do not have solar panels. Why not guilt the solar industry for doing a poor job pricing and blanketing the entire US South and Southwest with our plentiful sunshine? Or those who with bated breath talk about EVs. EVs are clean only in places like Canada or Norway where the majority of utility fuel comes from hydro. In the rest of the world, utilities we depend on to charge EVs are still heavily dependent on fossil fuels.

I found Denis’ book measured from that point of view. He covers wide ground when it comes to energy – the role of albedo in deflecting solar radiation, carbon sequestration, the limits to hyrdo and nuclear power growth, the risks that come with fracking, the concept of “peak oil”. He is also realistic about our fossil fuel infrastructure and sunk costs. Not going away anytime soon because they also are source of raw materials for essentials like plastics and tires.

Given Denis’ meandering style, I also enjoyed as a bonus his various detours though how the English broke through in the quest for maritime navigational precision in the 1700s, the US Space Program in the 1960s and how different religions view man’s role in global warming.

It is a good read - will make you think long and hard why energy continues to be one of the globe’s vexing “Grand Challenges”. And why we need solar and wind energy in particular to scale up much more quickly and at far lower costs if we are serious about diversifying from fossil fuels.

This time of the year, I buy several packages of assorted candies. Keeps the neighborhood kids who come around on Halloween happy. I happened to check the contents of one pack – it had Hot Tamales, Chewy Lemonheads, Tootsie Rolls, Abra Cabubbles and who knows what else.

Would a 4 year old ask for those? Would their parents want their kids to have them?

And it hit me, enterprise software has become a bit like those assortment packs. I have asked scores of vendor executives why everyone is fixated on analytics and AI and not on functionality. They respond users cannot absorb our pace of feature delivery. In contrast, most customers say they see lots of me-too functionality and very little industry functionality. They are offered pretty analytics. Or tools which invoke grand wizards like Coleman and Pacioli and then underwhelm. And told to look for functionality from partners. Like the candy bag – too much of what customers don’t need, too little of what they would like. Then you have the other kind of bundling. You want SAP S/4? It only comes in the package with HANA. You want Oracle autonomous database 18c? Get ready to also sign up for Oracle’s infrastructure cloud. Or as Larry Ellison says tongue in cheek “only if you are willing to be pay less than you would pay Amazon”. You want Salesforce’s AI Einstein? Sign up for the package with IBM Watson. Take two AIs and call us in the morning.

It reminds me of the quote from Forrest Gump “Life is like a box of chocolates. You never know what you're gonna get.” I don’t know – for what companies pay for enterprise software they should be allowed to be a lot more picky. It seems vendors are driven more by marketing advantage with the latest buzzwords than customer needs.

I have a better idea. We should move to a concept around another holiday – Fukubukuro. Around their New Year, Japanese stores sell a "lucky bag” with all kinds of mystery items. But they do so at ridiculously low prices.

Mike McNamara is CEO of a remarkable $ 25 bn a year company that many people do not know much about. Flex is contract manufacturer for a wide range of products from automobiles to medical devices. Its design and shop floor fingerprints show on a wide range of products from Cisco routers to components for Ford cars to HP servers. They manufacture across 50m square feet in 100 sites in 30 countries and have to be extremely agile. In an interview I did with him a couple of years ago, I was struck by his comment that in some years they move a quarter of their physical plant across borders! Customers want to make products as close as possible to demand– to take advantage of changing US energy economics, to be closer to emerging middle classes in Indonesia or Brazil and other trends. This triangulation across industries, geographies and customers allows them to see changing component supply chains and design and technology trends and “see the future earlier” than the average company.

In a presentation at Workday Rising in Chicago this week, McNamara said to survive and thrive in this world you have to move from thinking of the information age to believing we are in the age of intelligence. He described their IT infrastructure, with the top layer as software platforms which translate data into actionable insights and feed them into digital displays to his workers. His CMO said two years ago "And while we recognize that the company flourished in the Information Age, we are now defining the new Age of Intelligence. Our name change – from Flextronics to Flex – reflects our evolution."

A decade ago, as I described at the start of SAP Nation, McNamara and his team took a significant risk going with a very young Workday as their global HR platform. Now they see Workday as an integral part of their intelligence platform. So do a growing number of Workday’s 1,800 customers and it was apt that the focus in the conference was on a wide array of analytics and on the platform that Workday is starting to open up.

Here are some key themes

- While the transaction systems are still HR and financials focused (and many of the sessions focused on nearly 900 features introduced in release 28 and 29), the planning products have been some of the fastest adopted by customers

- If the excitement around Prism analytics is any indication, their adoption will dwarf the momentum the planning products have seen. Early adopters include Christiana Care, Hitachi, Shelter Mutual Insurance, Thomson Reuters, and United Technologies Corporation. Prism builds on the Big Data discovery tools it acquired via Platfora and allows for bringing together data from a wide range of Workday and surround, especially vertical applications like patient accounting systems in healthcare, point of sales systems in hospitality and policy and claims in insurance.

- Workday founder Dave Duffield likes to talk about the Power of One having all his customers on the same release. The real Power of One is starting to show in the benchmarking, Data-as-a- service Workday has launched. An opt-in service, it allows customers to benchmark against peer companies on metrics such as employee turnover, span of control and business process effectiveness. The service should grow in power as Workday lines up external data sources

- Soon after its GridCraft acquisition in 2015, Workday introduced “collaborative analytics” in its Worksheets – some called that its “Hyperion killer”. The team in Boulder has been busy and has been releasing additional offerings

- The number of pre-built dashboards continues to grow as is the focus on the “close to disclose” process.

- The opening of the platform is allowing for extending the Workday reach into the enterprise and allowing for more data within its reach. The conference covered some of the early apps being developed on the platform including ID services at an airline and supplier requisitions. I liked a slide with a “your idea here” text box. The simple words are a bold invitation for customers and service partners to experiment with the platform

One of the presenters in the conference said “data has replaced oil as the most important commodity these days”. Actually, it is refined oil in the form of gasoline, diesel and kerosene which makes the world go. Similarly refined data in the form of actionable intelligence is what makes companies like Flex go. The Workday refinery will be working overtime for the next few years.

Oracle OpenWorld had even more going on than usual. Larry Ellison was so focused on autonomy facilitated by database version 18c that he had only slide for a number of other features it will introduce like 5 times faster RAC. Thomas Kurian, in his keynote covered very wide ground and he barely had time to talk much about AI as a service and the analytics cloud. I had time to just shake hands with Steve Miranda and Chris Leone when I would have loved to spend much longer discussing the impressive SaaS results Oracle has been reporting.

So, given all this, it would not have been surprising if NetSuite had been forgotten at OOW. Indeed, many had projected that NetSuite would quickly disappear, post-acquisition into the Oracle black hole. Many of Oracle’s acquisitions in the last decade had underutilized the employee and customer assets they acquired. Oracle appears to have learned from them and is treating NetSuite differently.

Mark Hurd had the NetSuite keynote moved from a nearby hotel for breakout tracks to the main hall at Moscone. Several analysts had their schedules changed to spend time in the NetSuite track. We spent some time with Evan Goldberg, the founder and he told us SuiteWorld, Netsuite’s own annual event would continue next year.

The biggest boost to NetSuite is it is leveraging Oracle’s global sales channels. That is freeing up investment dollars to accelerate localizations for several key local markets. The slide below shows what NetSuite would have expanded on its own versus what the Oracle channel is allowing them to cover.

I hoped to hear Oracle’s industry groups would similarly allow NetSuite to expand its industry feature set. Evan said they would continue to be cautious and not expand the product set too widely. The current industry coverage (in slide below) is not bad but the white space of industry applications which have not seen cloud and other modern architectures is large.

Still, the good news is NetSuite continues with its own brand momentum, and Oracle may have learned to handle acquisitions better than it did in the past.

Workday’s annual user conference, Workday Rising, is in Chicago starting Monday. The European version is in Barcelona in a few weeks.

It’s always an enjoyable event with “The Citizens of the Cloud” - some of the happiest customers in the world. Founders Dave Duffield and Aneel Bhusri showcase an entertaining keynote, and this year I am looking forward to hearing a talk from Mike McNamara, CEO of Flex, who I have profiled in my books and is always fascinating to listen to, and Peyton Manning, still one of my favorite ever football players.

I caught up with Dan Beck, SVP Platform Technology, and he kindly gave me a sneak preview of what we can expect next week

Data and Analytics

The theme this year is, "Go further together." It's what we continually strive to do by sharing our ideas, our insights, and our innovations in this venue. Last fall, as you recall, we made a couple of big promises to our customers around data and analytics. We're going to deliver on those at Workday Rising. As we shared early details with you in the Analyst Summit, we've made great strides to extend the analytical power of Workday to give our customers deeper insights into their business, and drive more informed decision-making. Some of the new offerings that will be rolled out will be, as always, unified with the rest of our products. Unified with Workday Financial Management, unified with Workday Human Capital Management, unified with Workday Planning, and empowering customers with one system where they can plan, execute, and analyze their businesses securely.

Our Platform

Expect plenty of excitement about the Workday Cloud Platform. We announced that we're opening up the Workday Cloud Platform in July, as you know, and we've seen a lot of applications and innovation -- first developed at the hackathon that we did in July during Workday Altitude in the U.S., and currently as part of our early adopter program. When we roll out new offerings, we always have a small set of customer design partners that we actively engage with to build out their use cases. We're going to share examples of those extensions and what they've built. Then we’ll share more details on partners that have been engaged with us on the Workday Cloud Platform to see what they've done, as well as new possibilities and some teasers for what's in store for the future.

The Refreshed UX

Another highlight that you'll see is a refresh of our user interface (UI). With Workday 29, which was our September 9th release, we've added that next level of personalization, sophistication, accessibility, which are more important than ever. We always listen to our customers, and their input really comes to life in this update – with new images, signs, and iconography incorporated into a new look and feel, which is very elegant and modern. Big credit to Joe Korngiebel and our UI and UX teams – we look forward to seeing how our customers engage and enjoy the new user experience.

Customer Satisfaction, Success, and Momentum

Customers are a core value of Workday, and we continue to focus our efforts on customer success. We consistently achieve a customer satisfaction rating of over 95%, as you know, and Aneel is excited to discuss this year's numbers on the big stage during the keynote. We'll also hear customers sharing stories through sessions and breakouts. Some of the brands you're going to see are Unum, WeWork, and Accuride – on how their businesses have transformed with Workday, and you’ll also hear Booz Allen Hamilton and Illumina articulate how analytics are shaping the world of HR. We'll hear some thought leadership as well, some really robust customer stories, and then we'll also share momentum across a variety of industries, including education and government.

Giving Back

With more than 8,000 attendees expected at Workday Rising this year, we knew we’d have a wonderful opportunity to rally together and give back to the Chicago community. We’ve partnered with Year Up, a non-profit organization that provides urban young adults with the skills, experience, and support that will empower them to reach their potential through professional careers and higher education. Among the Year Up students that have taken internships at Workday, more than 60 percent have become full-time employees. And with Chicago as our host city for Workday Rising this year, we’ll be donating $100,000 to Year Up Chicago.

We’re asking Workday Rising attendees to donate a piece of new or gently used professional clothing at the Innovation Exchange Expo. Year Up needs more donations for its career closets, as students are encouraged to project a professional image from the start of the program. Also, Workday Rising customer attendees will have the opportunity to mentor Year Up students on Thursday, October 12 in a mock-interview workshop scenario. We’ll also have plenty of Workday Giving and Doing activities, so be sure to keep an eye out for those in between sessions.

Dave’s Top Ten List

Sorry, but even inside the company, Dave’s Top Ten list is top secret stuff. We are all waiting with bated breath. Well, that’s one reason to definitely go to Chicago See you there!

In writing my last couple of books, Silicon Collar and SAP Nation, I have observed how hypocritical the IT industry has been about automation. AI, robotics, drones are good for customers but not in reducing tech labor? The worst offenders are outsourcers with their huge labor pools. Software vendors have been skittish about cannibalizing labor at these partners – for SAP Nation, the economic models I built showed a majority of costs in labor. Beyond economics, machines do dull, dirty, dangerous tasks much better than humans and we hate to admit it but tech does have a lot of repetitive work which would be better automated.

So, it is good to see Oracle announce at OpenWorld an autonomous database (version 18c) and semi-autonomous cyber security services.

Larry Ellison was at his professorial best as he explained concepts of machine learning and the promise of training computers with masses of data and gobs of computing power. The data center and IT/telecom infrastructure generates so much log data as Larry showed in one of his slides (click to enlarge)

And when you look at the trail from end user to network node to application accessed to database, you visualize the “big data” of potential security failures every minute in every organization.

Let's leverage this data to teach computers to provision, upgrade, tune, backup, patch themselves with minimal downtime and much more efficiently than humans can.

He used a carrot and stick approach.The carrot comes in the Oracle offer to run databases cheaper than even at Amazon and to do it with better SLAs. He demoed several workloads simulating customers in financial services, market research, insurance and retail. In each Oracle was faster and cheaper than Amazon’s performance. As he said early and often with sarcasm – you can only have it if you are willing to pay less for it

The stick came from repeated mentions of the shocking state of unpatched systems in IT world and the massive breach at Equifax and others like the Federal Office of Personnel Management. Humans do not do a good job patching systems, especially when they are mandated to reduce downtime. Why are we fighting the bad guys’ computer power with just our people power?

Makes a lot of sense, but the autonomy will only be available in the Oracle Public Cloud or the Cloud at Customer (a managed service from Oracle). I can see their reasoning – if Oracle is going to provide a SLA of 99.995% up-time it wants to control tightly the environment.

Personally, I would like to see the autonomous database also available on-premise or as an appliance (minus, of course, the SLA and the cloud pricing model). Here’s 3 reasons why:

a) Customers are extremely comfortable with Oracle’s database prowess, much less Oracle’s cloud infrastructure competency. In the June 2017 Gartner IaaS Magic Quadrant, Oracle was in the bottom right as a Visionary – way behind Amazon, Microsoft, Google, IBM and Alibaba. In 2-3 years, the comfort level will be much higher, so why not let customers get familiar with 18c in the meantime in their shops? Oracle could justify the customer investment by showing the savings in DBA labor and that of managed services, rather than what came across as Amazon bashing as Larry ran version after version of his demo workloads and showed savings with Oracle that way.

b) Global companies are already struggling with changing data residence requirements around the world. A database in the cloud will require much more due diligence on their part.

c) Many customers are loathe to increase the lock-in large vendors like Oracle, SAP and IBM already have. SAP is trying to sell them databases, Oracle is now trying to sell them infrastructure services in addition. May seem trivial from a vendor point of view, but it is not from the CIO's because of bad behavior of large vendors with the lock-in they already have.

So, Oracle Autonomy is a giant leap forward for the industry. But it may need an even more giant leap of faith for customers. At least, in the near future.

“Gartner's research chief couldn't have opened the company's flagship conference with a more astounding proclamation if he had claimed that next year's event would be held on the International Space Station and Gartner was offering free rides.”

Actually, I agree with Peter – I wrote a whole book, Silicon Collar which looks at a century of automation and how humans go through panic attacks every couple of decades about automation and impact on jobs. Automation tends to target tasks, not complete jobs. In general, it transforms jobs, not destroy them. And societies have “circuit breakers” which slow down rapid mass adoption of automation technology as I wrote here.

What I would I have liked to hear from Peter was “we were too pessimistic just 3 years ago”, when he said from the same podium

"Gartner predicts one in three jobs will be converted to software, robots and smart machines by 2025...New digital businesses require less labor; machines will make sense of data faster than humans can. By 2018, digital business will require 50% fewer business process workers."

And I would liked him to say “we really fxxked up” when we predicted that by next year (2018)

20 percent of business content will be authored by machines.

more than 3 million workers globally will be supervised by a “robo-boss.”

45 percent of the fastest-growing companies will have fewer employees than instances of smart machines.

In contrast, Oracle Co-CEO Mark Hurd shared with the OpenWorld audience a few hours later some of the “mean tweets” as he called it about some of the predictions he has been making about the cloud market.

Later in a Q&A, I joked with Mark that as an industry analyst he would have the luxury of hedging and assigning a probability to his predictions and then never publicly having to audit or redact his predictions

I first wrote about the Fourth Industrial Revolution in the 2013 book The Digital Enterprise. A collaboration with the CEO of Software AG, most of the examples profiled there were Germany based. At the same time, companies like GE were rolling out their vision of the Industrial Internet in the US and elsewhere. Today, it is far more mainstream and showing up as “Advanced Manufacturing” all over the world.

Plex does a very nice job capturing the excitement of this wave reshaping shop floors, logistics and customized products all over the world in their annual State of Manufacturing survey

“In review of the survey findings, there are a number of major factors that emerge as the foundation for the 4IR. Without question, cloud computing has been a universal accelerant for this innovation, supporting connected processes that extend across the shop floor and out into broader customer and supplier ecosystems. With cloud comes connectivity, enabling everything from tighter links across production ecosystems to better system, equipment, and end-product integration. Every day, new devices and equipment, both those designed specifically for manufacturing and those conceived for other industries or even consumer markets, are providing new opportunities for innovation and connection. From additive manufacturing (3D printing) to connected sensors and wearable devices, the Industrial Internet of Things (IIoT) is delivering new endpoints to enhance the ways we design, build, sell, and service products.”

Get yourself a copy. If you are only using cloud computing for your administrative functions and your IT infrastructure, you are missing out on the Revolution.

Oracle OpenWorld starts Sunday. I am going with more enhanced expectations than I have in previous years

As a baseline, I expect to hear updates on Oracle SaaS – financials, HR, ERP, CRM and on the NetSuite business unit. With a very strong 1Q where application revenues went up 62% year-on-year, it will be interesting to hear from new customers and how Oracle expects to keep growing its market share.

I hope to hear a lot more about vertical applications in the cloud. That is the next frontier for SaaS and Oracle is ideally positioned to lead in a number of industries if they are prepared to make the investments.

The driverless database is clearly something Larry Ellison is very excited about. Beyond details on speeds and feeds, I hope Oracle can quantify the likely impact on outsourced managed services, DBAs, BASIS in SAP world and other payback areas. An added bonus would be if Oracle starts to articulate a vision of autonomous applications leveraging robotics, AI, wearables, drones etc in various business processes.

Finally, I look forward to hearing about Oracle’s IaaS momentum. In the June 2017 Gartner IaaS Magic Quadrant, Oracle was in the bottom right as a Visionary – way behind Amazon, Microsoft, Google, IBM and Alibaba. It’s not a position they are likely very happy with. I am sure there will be plenty of “quotable quotes” about Amazon. I would like to also hear how about they will pick up market share from the weaker, legacy infrastructure, telecom, hosting and outsourcing vendors. And how they plan to leverage their much stronger PaaS position.

That’s the fun part about covering Oracle. So many angles to consider. And this year the Chainsmokers are playing at AT&T Park. No shuttle buses to worry about, a reason why I have missed all the bands at previous OOWs. So, I may also get to check out some “tattoos on shoulders”

Readers know I think the software market is at a pivot point. We have plenty of hr, financial and basic CRM functionality, but very little in the way of industry specific functionality. I have always liked IFS’s focus on complex, often heavily-regulated, asset-intensive industries and on product and asset centric break-fix and maintenance-based service organizations.

They are extending their industry focus with the acquisition of WorkWave, which offers cloud based field service and fleet management solutions targeted at micro-verticals such as landscaping, pest control, home delivery and HVAC service. A common thread is these sectors aim at residential customers and small businesses, tend to have recurring relationships and they have mobile workforces.

When I say extending, I mean out of IFS’s comfort zone in two major vectors. This takes them out of direct, large software sales model their current industries require to more web-based marketing and selling. And for now, WorkWave is largely US based, whereas IFS is particularly strong in Europe.

In talking to IFS Group SVP Fredrik Vom Hofe this morning, he estimates the US market for the sectors WorkWave focuses on is $ 11 billion so there is plenty of runway right here. And he was excited about leveraging more broadly the mobility, simplicity, usability and other unique traits WorkWave has successfully honed for SMEs in the industries they service.

Look forward to more such vertical investments. There is an incredible amount of white space waiting to be filled.

DSAG, the SAP user group for German speaking Europe, shared results of a recent survey involving more than 500 decision-makers from IT and various business units. Reading it I was struck by similarities and differences between how the US and European (with the DSAG base as a large proxy) markets view cloud computing and digital transformation opportunities

a) Cloud Computing

The DSAG survey says “the more than 3,300 DSAG member companies didn’t consider the other cloud solutions any more relevant for digital transformation. One of the DSAG’s missions is to critically assess the extent to which platforms such as Ariba, SuccessFactors and Concur can truly be integrated into existing IT environments and where their actual benefit lies for SAP users.” It is far different in the US market. “Ring fence with clouds” have been a dominant coping strategy in a number of SAP, Oracle, Infor and other on-premise customers for several years now. They explain the massive growth runs seen by Amazon, Salesforce, Workday, ServiceNow and other cloud vendors. SAP’s cloud acquisitions and customers in the US have also kept its own financial results respectable the last few years.

b) Digital Transformation

DSAG says “70 percent of respondents gave S/4HANA a high to very high degree of relevance for digital transformation, while more than half saw the Business Suite as another option for future digital projects.”. In the US, digital pioneers and increasingly the second wave are NOT relying on their ERP vendors, especially if they are in non-manufacturing industries. The reality is most of the large ERP vendors have not kept up industry specific transaction engines related to billing, merchandising, patient records and many others. You cannot do impactful digital transformation with just back-office functionality. Even when it comes to the back office, their AP system assumes you are still mostly paying by checks, not by corporate cards and digital methods. These vendors have also not pioneered much when it comes to next-gen customer facing areas, product engineering for contemporary smart products and services and next-gen business models. They are also stuck in older user based licensing models in a world where millions of sensors and machines are increasingly driving business processes. Even in Europe when you look at technology that Daimler and Bosch are embedding to make their vehicles and appliances smart, they are relying on a very different ecosystem of tech vendors. They are more likely to rely on a Foxconn than an Accenture for that digital evolution.

c) Automation

DSAG says “The verdict on SAP Leonardo is quite clear. 82 percent see this new solution for the Internet of Things (IoT) and Artificial Intelligence sector as playing a very small role in their digital strategy, which might be partially due to the solution only recently having been launched.” I think that applies to US market as well. When it comes to IoT, automation like AI, wearables and robotics, US customers are not waiting for their ERP and IT infrastructure vendors. They are adopting technology from smaller vendors like Uptake and Kiva (part of Amazon). And like GE, European companies like Siemens and ABB are investing heavily in their own “platforms”.

Vive La Difference, I say. Somehow, though I see a much more fragmented global IT and OT market in the future.

I tend to not listen to vendor quarterly earnings calls. I get much better value from briefings at industry analyst events and from customer feedback. I also find it irritating that executives brag and beat up on competitors on these calls knowing full well they will themselves be targeted a few days or few weeks later.

I listened to a replay of the Oracle 1Q18 earnings call last night, and sure enough there was bragging and bashing (like Larry Ellison saying “there is no one left to buy” ) but couple of things stood out for me.

The cloud momentum

As I wrote a few weeks ago, cloud computing is at a pivot point. In the next wave, hairy industry applications – utility billing, retail merchandising, healthcare emr - and many others need to be tackled. The easier administrative and customer facing cloud applications are maturing nicely. The operational systems, hardly at all. In the next wave, we will also need massive cloud infrastructure investments as decades of creaky on-premise and outsourcing/telco assets need replacing. The funny thing is most vendors will sell cloud to customers as replacing capex with opex then magically expect their own capex to disappear or be someone else’s responsibility.

So, I am pleased to see Oracle’s cloud momentum - Software as a Service (SaaS) revenues were up 62% from the previous year to $1.1 billion. and Platform as a Service (PaaS) plus Infrastructure as a Service (IaaS) revenues were up 28% to $400 million. To me, success encourages investments and I want Oracle to focus much more on verticals and infrastructure. With the broadest set of cloud offerings - SaaS, PaaS, IaaS and DaaS - Oracle is positioned to be the industry’s locomotive for the next wave of cloud evolution.

Autonomous database

With my recent focus on automation with Silicon Collar, I liked Larry Ellison previewing the “driverless database” on the call. He promised, using machine learning, it would reduce today’s labor (DBA and managed services) time and effort, and even more the errors they cause, while improving reliability to what he called “99.995% …while charging much less than AWS.” I want to next see what Oracle is thinking in terms of autonomous applications and how it plans to further leverage the growing world of robotics, drones, AI, wearables, sensors, 3D printing and other automation in its design of business processes.

I look forward to hearing, seeing and discussing a lot more on both topics next month at Oracle OpenWorld.

People still think of Rimini as a cut rate, third party maintenance provider for on-premise Oracle, SAP, IBM and Microsoft software. That was Rimini 1.0. In a talk series I did with them last year, I saw Rimini 2.0. Because they support customizations, not just the core software, I heard their customers and prospects talk about different ways they could rethink enterprise application and related infrastructure support. Rimini was allowing them to rethink outsource, not just software, vendor arrangements.

Now, Rimini is poised to enter phase 3.0. This Gartner research paper talks about the possibilities as Rimini finalizes its merger with GP Investments Acquisition Corp. Gartner says:

By using up to $157.8 million in cash from the SPAC (special-purpose acquisition company) investors to replace debt with equity, the company will strengthen its balance sheet, and

Merging with the SPAC allows Rimini Street to take a spot as a public company on Nasdaq (ticker: RMNI). Since the merger is between Rimini Street and a "fund" company, there should be no impact on Rimini's running its business.

More significantly, Gartner confirms what CEO Seth Ravin has previously discussed with some analysts. It wants to get beyond on-prem products into the SaaS world and the new entity should allow it more investment bandwidth to do so.

The larger software vendors still view Rimini as just a nuisance. Over 1,300 customers think otherwise, and a growing set of new customers will get to taste a very different form of enterprise support.

We live in troubled times. They call for principled leadership, standing up for values, and for ignoring our darker angels. Whether that was the intention of SuccessConnect or not, I certainly walked away from the event with that message.

Rob Enslin, President of SAP’s Cloud Business Group kicked off the event with a focus on philanthropy – Houston hurricane relief, Africa Code Week and SAP’s initiative to hire a large number of autistic candidates. No mention of software. Oprah Winfrey delivered a keynote (see my post here) which was about giving human goodness a platform. No political angles in her talk. Frances Frei, tenured prof at Harvard Business School making a transition to a senior position at Uber, engaged the audience in exercises focused on authenticity and trust. No discussion of the turmoil at Uber.

There were visible signs of focus on wellness – wearables as swag, cold pressed juices with kale and other exotic vitamins as nourishment. The breakouts focused on contentious issues like diversity in the workforce. I had to pinch myself a couple of times – am I at a weekend retreat with Deepak Chopra and Tony Robbins?

What was less on display was the software. The sessions were long on slides and words, less on demos. Given that it was my first SuccessConnect, I asked a few “regulars” – analysts who come to the event every year. To a person, they used the word “transition”. SuccessFactors is being transitioned to leverage SAP’s assets. The HCM chatbots are leveraging the CoPilot digital assistant SAP discussed at SapphireNow earlier this year. The planned Workforce Insights functionality will combine employee data from SF and contractor data from Fieldglass, another SAP cloud acquisition. SF will be available on HANA next year. The data centers should be able to leverage SAP’s still evolving cloud infrastructure plans. SF will leverage SAP’s field assets even more than it has in the last few years of success selling global deals. The leadership like the new President, Greg Tomb, will bring more legacy SAP pedigree. There will be tighter coordination with ASUG and other SAP user groups. In a Q&A, Jana Kanyadan, CIO at Mohawk Industries gave an impassioned endorsement for SF as an integral part of the SAP portfolio he had come to depend on.

Will this tighter embrace by SAP help SuccessFactors with the HRO buying center? Historically, SAP (and other broader ERP vendors) has not been able to “out-Dave Dave” in this demographic. That’s Dave as in Duffield who is legendary in that community with successes like PeopleSoft and Workday.

I look forward to seeing if this event was an exception or more of a statement of direction. The themes of leadership and values from this conference give it the potential to come at this market from more of an emotional and humanitarian angle. That even more than SAP’s formidable development and sales assets may give SF more of a competitive differentiation.

I feel the excitement and the nervousness of a freshman about to go to college and a rookie about to go to training camp. I am going to my first ever SuccessConnect next week!

One of the most popular strategies in on-premise ERP customer bases (SAP, Oracle, others) is to “ring—fence the core” with cloud HCM, CRM, SCM and other solutions. In the SAP customer base, the first advantage goes to SuccessFactors, Hybris, Ariba, Concur and other cloud solutions they have acquired in the last several years.

Thomas Otter, a fellow Enterprise Irregular and Gartner alum saw me at SapphireNow a few weeks ago and ribbed me on why I don’t spend time looking at SuccessFactors (he is GVP Product Management there). Even though I have significantly rationed time for industry events given all my other activities, I reached out to Stacey Fish at SAP and she somehow got me an invite to the sold-out event.

I expect an upbeat conference and not just because it is in Vegas. In both Gartner’s latest Magic Quadrant and Forrester’s Wave for cloud HCM Wave (thanks to Jarret Pazahanick for links), SuccessFactors shows as a leader along with Oracle, Ultimate and Workday.

Those who know me know I ask a lot of questions at such events. An annoying volume Not next week – I am going in with the humility of a rookie and a freshman. I have a lot to soak in. For those going to the event, I look forward to saying hello.

Salesforce has the honor of becoming “the first enterprise cloud software company to break the $10 billion revenue run rate"

Amazingly, just a short 8 years ago I was blogging about its “second billion”. They have gone from strength to strength.

Am I impressed? Hell, yes. Am I surprised? Hell, yes.

Here is a CRM vendor without much of complex order processing or ecommerce functionality. It is a CRM vendor in a world where there is no shortage of specialists which are transforming field service in the Internet of Things and where digital agencies and social platforms are transforming the marketing function. It is a platform vendor where ISVs do not have very deep vertical functionality. It is a vendor which resisted many temptations of fate to be acquired. In reverse, it keeps tempting fate by promising SIs an outrageously large halo around its revenues.

It has done several things right. While Oracle and SAP continue to target the CIO, Salesforce has built a rabid business user fan base, especially those aligned with revenue goals in companies. It has smartly latched on to emerging themes in the market be they Artificial Intelligence or IoT. CEO Marc Benioff has been willing to stick his neck out on a number of social issues. They know how to throw great parties.

I could go on why they have been so successful. Best to just say hearty congratulations, and watch their path to the “second ten billion”

I felt lonely last year as I was writing Silicon Collar. I had a minority view that modern machines will not lead to dramatic job losses, at least not any time soon. In recent weeks I have read many articles and studies which agree with my assessment.

A paper by Oxford and Yale researchers polled AI/machine learning experts about when machines would match human capabilities in various occupations. “Researchers believe there is a 50% chance of Al outperforming humans in all tasks in 45 years and of automating all human jobs in 120 years.”

US Treasury Secretary Steve Mnuchin has said “In terms of artificial intelligence taking American jobs, I think we’re, like, so far away from that – not even on my radar screen. I think it’s 50 or 100 more years.”

James Surowiecki writes in Wired “It’s a dramatic story, this epoch-defining tale about automation and permanent unemployment. But it has one major catch: There isn’t actually much evidence that it’s happening.” He quotes Andrew McAfee, co-author of The Second Machine Age, saying “If I had to do it over again, I would put more emphasis on the way technology leads to structural changes in the economy, and less on jobs, jobs, jobs. The central phenomenon is not net job loss. It’s the shift in the kinds of jobs that are available.”

Cathy Englebert and Scott Corwin of Deloitte write in Quartz that autonomous cars and trucks will not merely cannibalize driving jobs

“There will be new businesses that will digitally enable the planning and consumption of passenger and goods movement to be more efficient, enjoyable, productive, safer, cleaner, and cheaper. That could mean everything from maintaining vehicle fleets to remote monitoring….The combination of mobility and smart cities can also provide broader benefits, like increased access to healthcare, efficient energy, and different jobs.”

Nicholas Carr writes on his blog Roughtype “You can see the robot age everywhere but in the labor statistics”

Dan Nidess writes in the Wall Street Journal that Universal Basic Income would be a calamity. There has been plenty of discussion on UBI in the scenario of automation leading to massive job losses.

Roman Rytov passed along a TechCast survey of experts, concluding we are likely to go through a “Muddling Through” period of turmoil but relatively few net job losses is most likely.

Of course as the economy turns as it invariably will, we will see the pessimists come back. Happens every few decades.

President Lyndon Johnson set up a blue ribbon commission to explore growing panic about automation. Go back another few decades. Palo Alto, with its VCs and startups, is today the capital of the technology world. But would you believe the mayor of that city sent President Herbert Hoover a letter warning that industrial technology was a “Frankenstein monster” that was “devouring our civilization.”? You can go back every few decades all the way back to the Luddites and you find similar panic attacks. The Luddites, of course, had the ultimate panic attack. They were bands of English workers in the 1810s who destroyed newly introduced machinery, especially in cotton and woolen mills, fearing their jobs would be lost.

For now, though let’s celebrate machines. They take over our dull, dirty and dangerous tasks and make us smarter, speedier and safer workers.

“It is clear to me that despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks.”

When he arrived from SAP I was excited he would bring an IP centric mindset to a company which, in many ways, carries the pride and the burden of employing ever increasing volumes of human labor in its populous home country. I was also concerned his enterprise software background would bring along expectations of sky high gross margins.

The reality is he tried to turn around a company which is caught in a time warp.

In the 90s and early 2000s, Infosys delighted its customers. Its CMM Level 5 and Six Sigma certifications showed in productivity in the form of tangible cost reductions and lowered code error rates. In my opinion, one of the worst things to happen to Infosys was the glowing coverage in Tom Friedman’s book The World is Flat. The Bangalore campus became a tourist spot to bring government leaders from around the world as a showcase of India’s software capabilities. This went to Infosys’s head, even as performance on customer contracts was declining and labor teams and cost grew more and more.

I saw this first hand when I took CIOs to Bangalore. Infosys would talk with pride about the campus and the accolades and usually pull in some of the founders and early executives. In moderation, nothing wrong with that but when it took a couple of hours out of the day, it did not help present their credentials for the specific projects the clients needed help on.

Then, you saw a wave of underwhelming presentations at Oracle Open World in the 2010-13 timeframe. After paying millions for the pole position just prior to Larry Ellison’s talk, the pitches, many by early executives would literally put the audience to sleep. You could see the firm was slipping while clinging to its version of a glorious past. (the keynotes at OOW improved a bit when Vishal took over)

All this while Amazon was redefining “continuous improvement” with 50 price cuts over a decade around its cloud storage and compute services. Workday was taking an average of 5 employees to support every customer, using its multi-tenant model and in-background upgrades to delivering ever improving functionality to all its customers. Other SaaS vendors were delivering similar efficiencies. And Foxconn was delivering billions of high quality Apple and other devices under intense delivery and secrecy pressures. Even in a country like China which like India has to encourage labor -centric models, Foxconn was rolling out robotics and precision equipment.

In a comment, Infychallenger says the “world has changed from commodity to digital” and Infosys has not kept up. Actually, only a fraction of the world has. Even though I write plenty about innovation, most of IT is stuck in 15, 20, 30 year old tech. Way too many companies define digital narrowly – social media or web commerce. The truly transformative companies are making their own products and services smarter, turning their business models upside down and looking at new automation as they rethink supply chains, and move to advanced manufacturing concepts. These innovators are not using Infosys (and in fairness most other outsourcers). But they do want Amazon, Workday and Foxconn type efficiency in their back offices.

In 1995, Michael Treacy and Fred Wiersema wrote their best seller “The discipline of market leaders”. They argued dominant companies picked one of 3 focuses – operational excellence, product leadership or customer intimacy. Can Infosys become a product leader without beaucoup, particularly industry and geography specific, IP? Not likely. Can it become customer intimate? Possibly, but not with a headcount of 200,000.

Infosys could again become an operational efficiency leader like it was twenty years ago. But it would need to do that with a heavy focus on automation. Vishal tried that in small doses and even that met resistance. Its time for Infosys to become an operational leader like it used to be not just wallow in the glory of what it was.

In my book, Silicon Collar and in several blogs I have critiqued the 2013 study by two Oxford researchers which reached this alarmist conclusion about the impact of modern day machines on jobs: “According to our estimates, about 47% of total U.S. employment is at risk.”

I found several flaws in their study. With such a scary conclusion, it was irresponsible for them to not even lay out a timeline. They also did not appear to do a reality check for the job categories they analyzed. They calculated a high 0.79 “susceptibility to computerisation factor” (with 1.0 being the highest) to heavy truck and tractor-trailer drivers. This, when the U.S. trucking industry says driver shortages could reach as high as 175,000 positions by 2024 (even if the industry adopts autonomous trucks, regulations will likely require a driver as a backup). The professors had assigned an even higher factor of 0.84 to cartographers and photogrammetrists (who deduce measure- ments from images), which the Bureau of Labor Statistic projects as one of the fastest growing occupations over the next decade. They had assigned a yet higher 0.94 factor to accountants and auditors, whereas hiring at U.S. public accounting ﬁrms jumped to reach record levels in 2013–2014. What about new jobs from the automation and new digital businesses? The Oxford profs did not feel that was worth quantifying.

I could go on. My dissension paled compared to citations in 500+ academic journals which parroted that Oxford study without questioning any of its assumptions. Now, four years later, not a single job has been lost and yet, Oxford has chosen to not issue a disclaimer or mea culpa.

Instead, a more recent Oxford paper (in collaboration with colleagues from Yale) is much more realistic about “When will AI exceed Human Performance?”. The abstract says

“Here we report the results from a large survey of machine learning researchers on their beliefs about progress in Al. Researchers predict Al will outperform humans in many activities in the next ten years, such as translating languages (by 2024), writing high-school essays (by 2026), driving a truck (by 2027), working in retail (by 2031), writing a bestselling book (by 2049), and working as a surgeon (by 2053). Researchers believe there is a 50% chance of Al outperforming humans in all tasks in 45 years and of automating all human jobs in 120 years, with Asian respondents expecting these dates much sooner than North Americans.”

The chart below provides more “milestones” from the paper. It is much less alarmist than the earlier Oxford study – when the dates for machines being able to match human capabilties are years and decades away.

And yet, I wish this new study had surveyed practitioners, not just AI experts. They would have heard automation is still too expensive. That their industry regulators take a long time to approve technology in the workplace.

And I wish they had considered what I called in my book societal “circuit breakers” to rapid adoption of automation. While the pace of technology supply is accelerating, the acceptance rate is not keeping pace. As my book pointed out:

An early version of the ATM machine was introduced in 1960. Six decades later and even with mobile banking taking off, we still have over 90,000 bank branches across the U.S., employing over half a million tellers and other employees

The UPC code and scanner were patented in 1952. It took the grocery industry two decades to start to widely adopt it. The end result was not loss of checkout jobs. It improved inventory control and led to an explosion of SKUs. Even today, with self-check out kiosks in many stores, those jobs have not disappeared.

We have been predicting the death of “snail mail” for decades as email, texting, Skype, Facetime, and social media have become our preferred methods of communicating with each other. Unbelievably, the US Postal Service business has gone up — it sorts half the world’s paper-based mail and packages and keeps over half a million workers employed.

With digital voice mailboxes and most of us doing our own word processing and travel arrangements, who needs secretaries or administrative assistants? Well, according to the Bureau of Labor Statistics, that category still employs nearly four million workers in the US.

As a technologist, it frustrates me that markets absorb technology so gradually. As a realistic analyst, I have learned we cannot force that pace too much. The more we hype technology, the more cynical are the adopters.

In any case, I am glad to see a more realistic Oxford paper. Hope they would publicize this more and distance themselves from the previous one.

Update: The World Economic Forum has transcribed the range of dates in this video

Whether you worship or abhor President Trump, whether you are a proud American or one who thinks Americans are ugly humans, get ready for a dramatically new world order. And it has little to do with Trump.

We are ending a three-decade, post-Soviet period where the US was the locomotive for the world with more than our fair share of trade, immigration, military intervention. In the next phase, we will see other rich countries increasingly share the load.

On trade, post-WWII we set up the export engine model to allow Japan, Germany, Italy to recover. 70 years later they continue to benefit and China, Korea, India, Mexico and others also have also got used to that export model. The US cannot be the dominant sponge for taking in most of those exports. On immigration, the US legally allowed about a million a year starting in the 60s. In the 90s, with newer H1-B, L1, and other visas, and the undocumented we are up to over 3 a year. The US cannot be the dominant sponge for those labor exports going forward.

The world does not like US military interventions but does not exactly push the Australians or Nordics to pick up the slack where the world needs policemen. They scream at Trump for not willing to give up on our shale but will not ask Trudeau if he will not use his oil sands our Putin his coal. Spread the burden, world.

We will not slam our doors — but others will need to step up and pick up many of the flows. The Germans need to import more, Japanese need to open more to immigration etc. They would rather the US continue with that status quo while they enjoy their relative prosperity. You can blame Trump or the US broadly for these traumatic changes, but the bigger issue is other rich countries are fighting the need to pick up the slack.

The changes will be dramatic, especially for Americans. We will have more opportunities to export as other rich countries open up. Our small and middle class businesses will need to think much more globally. As our immigration slows down, our businesses will have to rethink apprenticeships and automation. As US multinationals bring back trillions they parked overseas we will find new sources of funding for our infrastructure. I am just scratching the surface on changes that are coming.

You can blame or credit Trump for these changes. It was going to happen anyways. Nature hates vacuums and linear trends.

I had a chance to travel to 60 countries in the last phase. I look forward excitedly to the next phase. I hope you do the same —embrace the coming changes in the new world order.

John Wiley released The New Polymath seven summers ago. Lots of readers tell me it is my best book. It inspired them as executives to build multi-disciplinary teams and multi-faceted products. Modern and ancient polymaths I described have inspired other readers to broaden their own skillsets.

They say Millennials treasure experiences over physical possessions. Book writing has made me feel much younger and similarly treasure experiences. Each of my six books has introduced me to hundreds of innovative executives and forced me to do lots of research and learn about subjects I knew little about or to surprises around topics I thought I knew a lot about. While I appreciate the compliment of Polymath as my best book, I take pride in all of them.

The big aha to me across the seven years since is how slowly technology matures, gets adopted and transforms societies. Us technologists constantly brag we live in a fast-moving industry. Silicon Collar forced me to look at a century of automation, identify circuit breakers which slow down adoption of machines and challenge the hysteria that the contemporary generation of machines will destroy tens of millions of jobs any time soon. SAP Nation 2.0 forced me to study next-gen products at Oracle, Infor, Microsoft, J.D. Edwards and SAP over the last quarter century and see how slowly enterprise software matures and sells. The excitement around healthtech and cleantech I described in Polymath has met the cold hard realities of markets and incumbent interests.

That frustration of slow change only spurs more innovation. The New Polymath was born out of patterns I had seen in the 2,000+ posts on my New Florence innovation blog in the preceding 5 years. In the seven years since the blog has cataloged another 3,500 entries. The next version of Polymath enterprises and innovators is analyzing the patterns in that knowledge base.

Oracle Cloud Applications Release 13 – its bi-annual cloud applications release – announced this week solidifies the company’s position as the industry’s broadest suite – across ERP, HCM, CRM and SCM domains. Oracle has been at work on this for over a decade now, and it shows that competitors like SAP and Infor who want to sell broad suites still have a few more years of work before their next-gen products reach the same level of breadth and maturity.

While all their products have been evolving, the adoption in their customer bases has been gradual. The cloud/in-memory penetration in on-premise customers across Oracle, SAP, Infor, Unit4 and even the pure play cloud vendors like Salesforce and Workday is still, by my estimate, less than 20%. Can release 13 prove to be the pivot point to accelerate customer adoption not just for Oracle but for the broader enterprise applications market?

I sure hope so. I have been a fan of the cloud model and been writing about it since I started this blog in early 2005, so I have been disappointed the customer adoption has not been faster. The reality check however comes from my conversations with customers. Here are some reasons I hear for their reluctance to migrate:

a) stable on-prem functionality – many customers will cite stability of their on-premise software as reason not to move to the cloud. The last generation of software applications are mature and “safe” and they can manage their costs with third party maintenance and other techniques. In contrast, migration to next-gen applications opens them to change management risks and another wave of SI costs and potential failures. It’s changing – I know several CIOs who are adopting a “cloud first” mindset but there many more who worry about the fear of the unknown.

b) new choices have emerged – I hear from a segment of customers that over the last decade, they have seen consumer tech, and peer companies like GE push the boundaries of process automation, cloud data centers, industrial internet much faster than have their enterprise software vendors. Also, those embarking on digital transformations say custom developed processes and products using social, mobile, analytical components have exposed them to a new wave of technologies and vendors. In other words, the landscape enterprise vendors compete in has changed quite a bit but they still tend to mostly look at and keep up with each other.

c) lack of vertical functionality – very few vendors have moved non-manufacturing functionality to the cloud. Many vendors claim to support “services” industries with their PSA capabilities but that does not help healthcare, retail, banking, utility and so many other industries. Many customers are waiting for cloud suites which provide a broader footprint for their industries.

d) distaste for software industry practices – still other customers will say they have been shell-shocked by the behavior of software vendors and their partners in the last few years. They are unwilling to re-commit given that distaste.

Now that products are starting to mature, I hope enterprise vendors start focusing on these and other issues which are holding back many customers.

With 13, Oracle has a clear product lead. As it invests in its IaaS data centers, its machine learning and other innovations, it will help the sector’s image in other ways. In many ways, I believe it is poised to be the locomotive for the sector. Time to accelerate!

Let me start off by saying I am really pleased I went to SapphireNow this year. I saw what I called the “dawn of intelligent applications” with Leonardo. I liked CEO Bill McDermott promising to do more for customers about toxic contract terms. I liked that the partner booths appeared much smaller than few Sapphires ago – books have been written about the massive and expensive ecosystem around SAP

But I am not sure customers want SAP to be “smooth and relaxed” as Dennis Howlett puts it after the recent earnings call. From a customer point of view there are areas where SAP should chill, others where it needs to be more assertive.

a) Be nice if SAP accepts that S/4HANA adoption in the incumbent customer base will be nice and gradual, as the product functionality incrementally evolves and the product becomes more stable. In volume 2 of SAP Nation, I presented the industry track record on next-gen products – at Oracle, J.D. Edwards, Infor, Microsoft and even at SAP with NetWeaver and I concluded:

a next-gen product takes years of development and maturation. Migrating a legacy customer base takes even longer. Those are just the laws of physics. SAP may be able to bend these laws slightly with S/4, but will likely not be able to break them.

So, personally, I have had modest expectations of S/4. SAP , or at least its marketing, does not agree and they claim it is “the fastest adopted product in SAP history (and) is available for all industries” Much of the adoption has been with smaller new customers. Existing customers are feeling the pressure to migrate when they find incumbent technology pretty stable and the migration costs, like a re-implementation, hefty. I would rather SAP savor S/4 progress like Charles Phillips, CEO of Infor commented about cloud adoption in his customer base in response to my note “If you hadn’t heard the 90,000 (total customer count) number, by any measure you consider over 8,000 individual companies (in the cloud) in 3 years a success.” S/4 is breakthrough in-memory, next-gen UX product. SAP has done well with sales so far. They should relish the progress not overhype its scope or coerce adoption within incumbent customers.

b) On the other hand, not sure SAP should be comparing itself to Workday and saying things like “And I can only tell you that based upon the way they’ve been purporting themselves in the market with letters, with fake news to customers and things like that we’re bringing our A-game.” Let analysts like me deal with such behavior, if true. Customers don’t want SAP fixated on Workday. They expect SAP to be aiming much higher – creating next-gen versions of hairy industry-specific books of record – retail merchandising, healthcare electronic medical records, utility billing – not being content with back office functionality. They expect it to be catching up to consumer tech leaders like Amazon and Google when it comes to data centers and artificial intelligence. In fairness, it’s not just SAP - for the amount of money customers pay enterprise software vendors, they need all of them to aim much higher.

c) Customers want SAP to be hyperactive in other areas. They have been loyal given the stability of the products particularly of R/3/ECC. But many are not happy with the cost – value from maintenance is low. The indirect access clause and other toxic contract disputes are frustrating many of them. Most have heavily customized SAP and surrounded SAP with cloud solutions. It is good to see SAP deliver tools like Transformation Navigator, but feedback from customers is they are aimed to help SAP sell its new products not as much un-tangle the hairball they find themselves in. Two decades ago, customers used SAP to replace tens, even hundreds, of departmental applications. Now their SAP landscape has become just as complicated.

SAP is doing lots of good things. It needs to do other things better. The end goal should be that customers feel “smooth and relaxed”.